N.Y. Uniform Commercial Code 3-306 – Rights of One Not Holder in Due Course
Section 3–306. Rights of One Not Holder in Due Course.
Terms Used In N.Y. Uniform Commercial Code 3-306
- Contract: A legal written agreement that becomes binding when signed.
- Instrument: means a negotiable instrument. See N.Y. Uniform Commercial Code 3-102
- Precedent: A court decision in an earlier case with facts and law similar to a dispute currently before a court. Precedent will ordinarily govern the decision of a later similar case, unless a party can show that it was wrongly decided or that it differed in some significant way.
Unless he has the rights of a holder in due course any person takes the instrument subject to
(a) all valid claims to it on the part of any person; and
(b) all defenses of any party which would be available in an action on a simple contract; and
(c) the defenses of want or failure of consideration, non-performance of any condition precedent, non-delivery, or delivery for a special purpose (Section 3–408); and
(d) the defense that he or a person through whom he holds the instrument acquired it by theft, or that payment or satisfaction to such holder would be inconsistent with the terms of a restrictive indorsement. The claim of any third person to the instrument is not otherwise available as a defense to any party liable thereon unless the third person himself defends the action for such party.